By Ye Xie and Henry Ren, Bloomberg markets live reporters and strategists
Bank of America strategists are urging their clients to use cheap options to hedge the risk of rally in Chinese stocks, a tempting recommendation for bargain-hunters in discounted Chinese stocks. But unless Beijing resets its economic policies, there’s a risk that Chinese’s assets turn into a trap for traders.
The relentless selloff in Chinese stocks shows no signs of letting up. The benchmark CSI 300 index has lost about 12% since mid-May, heading for an unprecedented fourth-consecutive year of losses. At about 8.9x forward earnings, the MSCI China Index is trading less than half of the valuation the S&P 500.
